This project will develop a model of state choice of spending levels for alcoholism treatment and will examine the effect of that treatment on health outcomes by means of a simultaneous equations model based on political economy theory. In this model, citizen preferences, economic influences, and political structure simultaneously determine alcohol tax levels and treatment spending levels. The influence of state income levels, federal grants, the pressure of state mandates, the state's budgetary obligations for other public spending programs, and voter characteristics all will be used to explain the substantial variation in state treatment spending and average tax levels. In Phase 1 of the project, this system will be estimated with 1986087 cross section data. In Phase 2 of the project, a time series cross section design will be used to take account of lags and state-specific effects.